OGC, WEX, AUX
It wasn't that long ago that OceanaGold aka OGC looked to be in trouble. Permit issues shut down their Didipio Ag/Cu mine in the Philippines, the new Haile Au mine in the US was having teething problem, and their balance sheet was looking iffy.
Today the situation is very different, evident in their newly released Q! results Didipio is back running on rails, Haile is performing much better, the New Zealand gold mines are running well, and they are debt free and were able to increase their cash stash from $159M to $221M in the quarter in spite of spending $20M on share repurchases and paying another round of recently reinstated dividends. Remarkably, their net profit in Q1 was $101M, with FCF of $69M.
The strong results were underpinned not just by high metal prices but also by a major increase in both Au and Cu production, to 117k oz and 3400t respectively. Cash costs rose to $975/oz Au, but that was not enough to dampen the party.
One surprise is that OGC is planning a share rollback in order to list 'on a major U.S. exchange'.
Given these results, it is no surprise that OGC is up big today to a new ATH. I do regret that I was unsuccessful in reloading the shares I sold in the low $4 range even though I made a big profit at the time.
It ll be interesting to see what the analysts think. Their targets for OGC are generally between $5.50 and $6, right around or below the current share price.
Message 35129236
Western Exploration aka WEX released a PEA for the Doby George Ag deposit on its Aura property in Nevada. Unfortunately it landed with a thud. I think the numbers are reasonable, so the market must have been expecting more
The base case of $2150 gold generates an IRR of only 25.4%, but that does rise to 62.2% using a $3000 gold price. The capex is very reasonable at $118M, as is the estimated AISC of under $1200.
Clearly they need to increase both the economic returns and the size of the Resource at Doby George, currently estimated at 395k oz Au Indicated and 71k oz Inferred. Fortunately some recent discoveries around Dolby George make that a certainty, so I expect resource growth when they continue on to a PFBS.
WEX has been a disappointment, but I am going to continue to hold my small stake. I may even average down if it looks to me like the stock price has bottomed.
Message 35129291
One of the most ballyhooed recent gold discoveries in Australia has been SXGC's finds at Sunday Creek in the Victoria Goldfields. Hence it is no surprise that Golden Cross Resources aka AUX is talking up the similarities to its recently acquired Reedy Creek tenement, located just 10km away.
But the comparison is a fair one. AUX has been able to establish a 3 km long gold in soil anomaly, a strong in indicator in the area, and which overlies similar folding to that observed at Sunday Creek.
AUX has also been able to locate more than 1350 artisanal workings that follow the same geology, and while examining historical drilling datasets came up with intercepts like 2.0m at 174.4 g/t Au and 11.0m at 31.4 g/t gold.
AUX plans to emulate SXGC by following the 'testing the ladder' approach, which focuses on identifying 'stacked, steeply dipping high-grade gold bearing quartz veins' like those normally found in the area.
They expect to begin drilling in June, and will release more detailed plans before that.
Message 35129330 |
